Influence of generalized trust on Canadian consumers’ reactions to the perceived food risk of three recurring BSE cases

Interest in the influence of trust on consumers’ responses to food risk perceptions associated with
Canadian instances of BSE motivates this study, in which Canadian households’ expenditures on
fresh meat are assessed in the context of the first three recurring risk events in which bovine
spongiform encephalopathy (BSE) was found to have affected Canadian cows. Engel Curve
analysis focusing on the dynamics of the monthly meat expenditure shares for a selected sample
of 437 Canadian households for 2002 through 2005 is applied based on data on household
expenditures for meat purchased by a national sample of Canadian households from the Nielsen
Homescan® Canadian panel, supplemented by survey responses on BSE risk perceptions and
measures of trust. Two sets of models are estimated: Engel curves in differences with instruments
in levels and Engel curves in levels with instruments in differences. It is found that habit
persistence limited households’ reductions of beef purchases following the first BSE event and
that that trust limited households’ reduction in beef expenditure shares following the subsequent
two BSE cases. Significant seasonal effects and a significant negative influence on beef
expenditure shares are also found, consistent with the trend of declining consumption of beef in
Canada since the late 1990s.